Growth Codes How Frontrunners Monetize Data ON THE PULSE OF THE NETWORKED SOCIETY

Transcription

1 Growth Codes How Frontrunners Monetize Data ON THE PULSE OF THE NETWORKED SOCIETY Greger Blennerud Head of Marketing, Mobile Broadband November 2015

2 9.1 BILLION MOBILE SUBSCRIPTIONS BY 2021 Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 4

3 Mobile subscriptions APAC, India, Africa drive net additions Smartphone subscription uptake is strong 75% of all mobile phones sold in Q By 2016 the number of smartphone subscriptions will surpass those for basic phones Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 5

4 Smartphone subscriptions set to almost double by 2021 Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 6

5 Mobile Traffic GROWTH INCREASING AGAIN June 2015 Nov 2015 Global total monthly traffic in mobile networks, June vs November, 2015 Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 7 Note: Based on actual measurements. Traffic does not include DVB-H, Wi-Fi, or Mobile WiMax. VoIP is included in data traffic.

6 10 times Mobile data Traffic by end of GB 2.6 GB 20 GB 9.7 GB 1.4 GB 8.5 GB Monthly consumption per device type Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 8

7 SMARTPHONE TRAFFIC GROWTH 2GB Stream video* 30 min/week Browse 15 websites/day Download 5 apps/week Send/receive 30 s/day Average data traffic per active smartphone (GB/month) 6GB Stream video* 20 min/day Browse 15 websites/day Download 15 apps/week Post 15 photos/day 0 North America Western Europe Asia Pacific Latin America Middle East and Africa Central and Eastern Europe Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 9 *Any type of video streams (YouTube, embedded clips, )

8 14X more video traffic in 2021 DRIVERS Evolving devices with larger screens and better resolution Video part of online content, incl news, ads & social media User behavior changes, with video being consumed everywhere Faster networks & better App Coverage Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 10

9 population Coverage By 2021, over 90% of the world s population will be covered by mobile broadband networks Over 20 new mobile broadband subscriptions are activated every second, somewhere in the world, allowing high speed access to internet services Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 11

10 28B Connected devices by 2021 More than 15 billion will be connected M2M and consumer electronics devices. 1.5 billion of these with cellular subscriptions by 2021 Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 12

11 Decoupling energy from traffic growth Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 13

12 Is anyone making money from this? Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 14

13 An Extended group of frontrunners keeps growing Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 15

14 Frontrunners identified Leading Revenue Growth Profitable Data centric ~5% or higher full year growth Positive EBITDA >25% non-voice revenues in last quarter Evaluated and identified based on 3 key parameters Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 16

15 Different strategies in different markets AMERICAS EMEA APAC Quality led Market led Offering led Source: Ericsson Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 17

16 What have they done to be that successful? Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 18

17 Frontrunners think differently Problem Focused Maximizing old revenues Connectivity and Services as commodities Market & Tech Silos Shift of mindset Opportunity Focused Innovating new revenues Connectivity and Services as differentiators Market & Tech Synergies Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 19

18 the growth codes Measure and Manage User Experience Streetwise Metrics Create Performance Gap to Competitors Gap Minding Market your Performance Leadership Showcasing Drive Usage The Enabler Create sustainable growth Monetize Usage Co-Partnering Create Strategic Partnerships for Innovation Unboxing Create Innovative Offerings Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 20 Eco-systematic Embrace and leverage Innovation

19 Is there a common strategy behind their success? Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 21

20 Frontrunners apply a dual approach to growth Existing Markets & Existing Capabilities Strategies for current growth Traditional telecom products & services Present markets & segments New Markets and/or New Capabilities Strategies for future growth IoT & Vertical solutions Cloud & ICT services Expand operations and footprint (e.g. through M&A, geographical expansion or alliance) Explore new business models, partnerships and services Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 22

21 three Strategies to profitable growth Quality-led Progression Market-led Adaptation Offering-led Transfomation Differentiate on high-performing networks and brand preference Differentiate on quick adaptation to market conditions Differentiate on uniquely designed offerings redefining customer value Selective customer experience efforts & simplification focus Extensive campaigns & promotions Vast distribution network Rely on extensive high-quality service portfolio & converged offerings Few strategic partnerships - extensive own VAS offering End-to-end customer experience focus Selective distribution & campaigns Segmented approach often utilize sub brands Fast followers on new products & services Selected strategic partnerships High focus on market innovation One-for-all offerings and targeted distribution First to market with new offerings Several strategic partnerships High focus on operational efficiency Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 23

22 Applying strategy to codes Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 24

23 quality-led progression leverage the growth codes Gap Minding to always have the best network Showcasing to demonstrate customer value and create brand preference Unboxing to package converged solutions and vast VAS offerings in attractive bundles Co-Partnering through longterm collaboration with suppliers to reach common goals Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 25

24 market-led adaptation leverage the growth codes Streetwise Metrics to support the development of an enhanced endto-end customer experience Unboxing to mirror and create enhanced segmented offerings Showcasing to effectively market the segmented offerings, highlighting the customer value Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 26

25 Offering-led transformation leverage the growth codes Gap Minding to meet customer expectations Unboxing to create innovative and unique service offerings Eco-systematic to bundle offers with partners to increase customer value and improve brand image Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 27

26 Some interesting trends Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 28

27 Frontrunners emerging Offering-led Transformation Market-led Adaptation Quality-led Progression Market share position: #1 Market share position: #2 Market share position: #3 Strategy Type Market Share No. of frontrunners 30 est. No. of frontrunners 30 est Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 29

28 Quality of service is the foundation of growth Frontrunners leverage network performance in one of two different ways Superior network performance as a differentiator Improve network performance to meet customer expectations Big investments, you have to be committed in outspending your rivals. - COO, Frontrunner Asia-Pacific You need to have a credible network, it s a must have. - CSO, Frontrunner North America Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 30

29 Growth Code #4 Redefine Subscription Unboxing Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 31

30 The Staircase of growth stepwise approach to increased revenues Enable Extend Expand Explore Smartphones Data plans Need for speed More devices Content Adjacent markets 2-sided business models Expose network capabilities Time and effort Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 32

31 Monetization is about stimulating consumption Colgate increased sales with 40% by making the hole of the tube 1 mm larger IKEA are using inexpensive teaser products as ice-breakers for further consumption McDonalds introduced super size meals and sodas, changing the perception on what is normal Candy is now sold in large boxes rather than small paper bags, directly impacting the size of a full bag Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 33

32 App coverage voice & sms Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 34

33 HD Video app coverage Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 35

34 HD Video App coverage Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 36

35 30% increased usage... Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 37

36 Taking device upgrades to the next level Don t get stuck with a phone you don t want! Upgrade 3 times per year $20/month over 18 months No upfront cost No upgrade cost Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 38

37 DL Speed [Mbps] DL Speed [Mbps] New capabilities increase requirements on speed Xperia Z5 (Sony) World first smartphone with 4K (2160x3840) display. Will be launched in this autumn. iphone6s (Apple) Capable to take 4K video. (Display resolution is still 1080p) Launched on 25 th Sept ,5 Target speed for 4s Time-to- Content 2,4 5 7,6 20Mbps 0 4K 360p 480p 720p 1080p 4K Target median speed for 90% Time-to-Content Guarantee 80Mbps 60 4K experience rely on a fast network K 360p 480p 720p 1080p 4K Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 39

38 Unleash devices and monetize the traffic Case study Actual Potential Site potential: +100 GB per day with investment in 3G & 4G Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 40

39 2. capture the growth in data

40 Transitioning from voice to data Traffic Voice era Transition era Data era Revenue Revenue growth from voice Decline in voice revenue not offset by data growth Usage and packaging aligning, resulting in revenue growth Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 42

41 Checklist for success Smallest monthly packages no less than ~1GB* Day/week packages (20 / 200MB) Hard Stops Force top ups and reduce customer care issues Transparancy Comfort drives usage Simplicity Ease of use when topping up Move towards family and multi device plans Increase usage and improve NPS and churn Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 43 *) Some markets require even bigger buckets

42 Data consumption... Extreme variation Segment size 5% 95% 25-35% Consumption <0,1 GB ~0,5-3 GB >>10 GB Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 44

43 3. drive the usage of data and the need for speed

44 Automatic Top-ups replace throttling Before: Now*: Start of bucket utilization 1. Bucket is utilized 2. Notification is sent by SMS Start of bucket utilization 1. Bucket is utilized 2. Automatic prolongation is activated with a fee 3. Notification is sent by SMS Speed is unlimited Speed is limited to e.g. 256 kb/s Speed is unlimited Speed is unlimited Billing cycle Billing cycle MTS and Vimpelcom shift approach from throttling to automatic bucket prolongation Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 46 *) Policy adopted for all new smartphone tariff plans

45 Keep data running Orange lets customers navigate at full speed after your data quota has been consumed Activation: US$0.7 1h speed boost Speed boost capped when cost reaching +80% of the monthly fee Relevant picture Get speed at need 1h, 24h, 1W or simply Top Up? Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 47 Orange Dominicana, as of Jan 2014

46 Roaming solution for Visitors Rent a mi-fi device during visit to Korea unlimited data ~ 4.4 USD per day ( USD deposit) All airports, harbor's and prime city locations Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 48

47 Roaming solution for Visitors Rent a SIM during visit to Korea ~ 5.3 USD per day ( USD deposit) 0,53 USD per min 9 cents per SMS 1GB data/day All airports, harbor's and prime city locations Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 49

48 4. Drive the connection of more devices

49 Campaigns to stimulate more connected tablets Device subsidies Lower the entry barrier by offering discounts on additional tablets added to the plan, leveling the price with a Wi-Fi only device More data Attract customers with more or even free data when connecting an additional device, to make users appreciate the value of the plan Subscription discounts Lower the entry barrier by reducing the initial and monthly fee for additional devices added to the plan Verizon campaign focused on discounting LTE tablets and offering more data T-Mobile campaign focused on discounting subscription and offering more data Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 51

50 5. Drive the demand and monetization of apps and content

51 DiGi (Malaysia) StarHub (Singapore) Celcom (Malaysia) LGU+ (South Korea) Globe (Philippines) NEXTEL (Peru) Nextel (Mexico) olleh (South Korea) Vodafone (Egypt) SKT (South Korea) M1 (Singapore) SmarTone (Hong Kong) US Cellular (USA) Chungwa (Taiwan) Optus (Australia) PCCW (Hong Kong) Wind (Italy) SingTel (Singapore) Maxis (Malaysia) FarEasTone (Taiwan) AT&T (USA) Taiwan Mobile (Taiwan) Telstra (Australia) One2Free (Hong Kong) Vodafone (Australia) Vodafone (Italy) Claro (Peru) Verizon (USA) 3 Italia (Italy) Facebook Promotions with direct impact on usage Cellular Facebook usage (MB / User / Month) Globe - Philippines: >Free Facebook no Wi-Fi needed > 65% growth in Facebook users during promotion > 23% increase in mobile browsing & other data revenue 2Q13-2Q14 Take Facebook to the streets Just like users want Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 53 Source: Mobidia, 2015

52 Share of smartphone users paying regularly for digital services Users are ready to pay for digital services > 37% of smartphone users in the US are subscribing and paying for at least one digital service > On average, these customers spend $5 more per month on their subscription Deeper penetration of digital services correlates with willingness to pay Instant messaging Indonesia Brazil US Share of smartphone users who use a digital services Source: Ericsson ConsumerLab 2013 Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 54

53 Etisalat Dobox mobile Video-on-Demand, Nigeria > Download Movies, Trailers, Music videos, Documentaries and TV series > Select preference for video quality; rich MP4 file or lighter GP3 file > No direct data charges, content paid per download Music videos and movie trailers N20 ($0.1) Short films and documentaries N100 ($0.5) TV series N150 ($0.75) Charges deducted from the user s airtime (minutes) Operators tapping into the ever growing demand for video Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 55

54 Broadcasting adds new opportunities Verizon uses LTE Broadcast technology in new mobile video service Go90 The ad-supported app was launched Oct. 1 on ios and Android Available to customers of all carriers Offering 8,000 titles and over 35 exclusive original series Major sports events (>900 per year) The technology enables new use cases, like broadcast of video ads to a fleet of taxis Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 56

55 Data consumption... Extreme variation Segment size 5% 95% 20% Consumption <0,1 GB ~0,5-3 GB >>10 GB Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 57

56 Video only add on? Video 20 GB or 20h 3$ only YouTube 5$ select 3 10$ any video Add on to existing Premium Plans Additional revenue targeting high Video Consumers Marginal cost per GB is a few cents... What is the Price Elasticity for high Video Consumption?? Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 58

57 6. Explore adjacent business areas

58 T-Mobile to revolutionize the enterprise segment? > Fixed rates for simplicity & predictability Unlimited voice, text, 1GB data at $16 Volume discounts kicking in at 20 users 4G speeds, Wi-Fi Calling No contract period, no commitment > Family line discounts, creating incentives for employees to hook up with private number > Business tools to mobilize your business Mobile-optimized websites Free Business account service, 24/7 John Legere, CEO, T-Mobile USA 40 percent of carriers' wireless revenue comes from business users. We're going to do to the business sector what we did two years ago to the consumer segment Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 60

59 Sprint targets enterprises with workplace-as-a-service > $200 per user per month Half the cost of comparable solution according to Sprint > Service includes Dedicated customer care WAN connectivity Enterprise grade managed Wi-Fi Local and long-distance voice Audio and video conferencing Online collaboration Instant messaging and presence tools Mobile device management support across multiple carriers Bring-your-own-device support Optional Sprint wireless plans for smartphones and tablets that Sprint will offer at discounted prices Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 61

60 Differentiated service Quality for enterprises Verizon launches Wireless Private Network targeting enterprises and governments Allows customers to manage their networks, including service differentiation and traffic prioritization A networked society implies service differentiation Verizon launch, Sept 2015 Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 62

61 7. address new markets through two-sided business models

62 China unicom zero-rates sales portal shares revenue > Partnership between China Unicom, China Mobile and Alibaba Zero-rated access on Taobao Mobile e-commerce platform on singles day (a key shopping day in China) Within 70 minutes, transaction value reached 163 musd, more than the whole 24 hours of the singles day 2012 > Benefits for the operators: Revenue share agreement with Alibaba Increased customer loyalty and satisfaction Increased mobile data usage Brand perceived as modern and trendy Encourage online shopping through zero-rated services get revenue share Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 64

63 8. How operators Expose network capabilities to create ecosystems for application developers

64 smartphones turned medical tools $10 device turning smartphones into mini-microscopes Enables identification of parasites Potential in the healthcare industry yet to be discovered Extend the application and value of smartphones Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 66

65 smartphones turned medical tools $10 device turning smartphones into mini-microscopes Enables identification of parasites Potential in the healthcare industry yet to be discovered Extend the application and value of smartphones Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 67

66 Ericsson Mobility Report, June 2015 Ericsson AB 2015 Page 68